The Role of Analysts in Intra-Industry Information Transfer

Hilary, Gilles; Shen, Rui

doi:10.2308/accr-50437

Cited by 81 publications

(21 citation statements)

References 33 publications

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“…Specifically, non-announcing peer firms' returns respond to (earnings) information disclosed in the quarterly earnings announcement of an announcing firm in the same industry. Other studies have since provided additional evidence on the existence and determinants of earnings announcement intra-industry information transfers Wild 1990, 2000;Asthana and Mishra 2001) and have provided evidence of similar information transfers around other types of (accounting) disclosures, including management earnings forecasts (Baginski 1987;Han, Wild, and Ramesh 1989;Hilary and Shen 2013) and analyst reports and recommendations (Piotroski and Roulstone 2004;Crawford, Roulstone, and So 2012). The importance of industry information has been documented in various other settings as well.…”

Section: Introductionmentioning

confidence: 92%

“…Previous literature on intra-industry information transfers has explored the role of analyst (cross-) coverage in the transfers of industrywide information. For example, Hilary and Shen (2013) find that when a firm issues a management forecast, analysts who have experience in covering the issuing firm also improve the accuracy of their earnings forecasts for other non-issuing firms in the same industry. This finding suggests that analysts use relevant industry information in the issuing firm's management forecast to update their forecasts for the other firms they cover in the same industry.…”

Section: Institutional Cross-holdingsmentioning

confidence: 99%

“…We also investigate the mechanism by which life cycle information is transferred. Using management forecasts, Hilary and Shen (2013) show that analysts play an important role in the transfer of industry information between "issuing" firms and other "non-issuing" firms covered by the same analyst. Such a role is consistent with the view that analysts possess industry expertise (Kadan et al 2012) and can facilitate information transfers across the firms they cover (Muslu, Rebello, and Xu 2014).…”

Section: Introductionmentioning

confidence: 99%

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Intra-Life Cycle Information Transfers

Lyle¹,

Vorst

Yohn

2019

SSRN Journal

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We investigate the presence of a shared life cycle component in earnings and test whether the earnings of one firm are relevant for valuing other firms in the same life cycle stage. We find that firm-pairs in the same life cycle stage have greater accounting comparability and greater comovement in their returns, operating performance, and investments than firm-pairs consisting of firms in different life cycle stages. We further document economically significant transfers of information from announcing firms to non-announcing life cycle peers around an announcing firm's earnings announcement. The magnitudes are comparable to that of intra-industry information transfers and do not depend on whether the life cycle peers are also active in the same industry. In contrast, we find that intra-industry information transfers are smaller for industry peers in different life cycle stages. Information transfers are stronger for life cycle peers that have greater (transient) institutional cross-holdings, suggesting that institutional trading is an important mechanism by which life cycle information spills over. Overall, this study provides insight into the factors that shape a firm's earnings generation process and investors' use of such factors. Furthermore, this study complements prior literature on firm life cycle by providing additional evidence on the importance of life cycle in the valuation process."Skilled analysts must view companies from a perspective that identifies where they stand in their life cycle, realizing that companies refusing to 'act their age' can destroy value." (Aswath Damodaran) I.

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Section: Introductionmentioning

confidence: 92%

Section: Institutional Cross-holdingsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Intra-Life Cycle Information Transfers

Lyle¹,

Vorst

Yohn

2019

SSRN Journal

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“…Conforme Lima e Terra (2004) e Sarlo Neto (2004), o preço das ações de uma empresa reage à divulgação das informações contábeis de outras empresas. Assim, as informações de uma determinada empresa podem ser extremamente importantes para outras empresas do mesmo setor (HILARY;SHEN, 2013). Além disso, de acordo com Silva et al (2016), no que tange à capacidade informacional dos lucros, a interação entre o lucro e outras informações contábeis pode detectar a possibilidade de melhoria da capacidade informacional.…”

Section: Introductionunclassified

Comparabilidade dos relatórios financeiros e informatividade dos preços das ações no Brasil

Reina

Carvalho²,

Reina

et al. 2019

R. Contemp. Contab.

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As informações divulgadas de uma empresa são mais úteis se puderem ser comparadas com informações semelhantes de outras empresas, pois a comparabilidade dos relatórios financeiros auxilia na formação das expectativas do mercado, expandindo e melhorando a capacidade de previsão dos investidores. Assim, o objetivo do estudo foi investigar o impacto da comparabilidade dos relatórios financeiros na informatividade dos preços das ações das empresas brasileiras. A pesquisa, que compreende o período de 2005 a 2015, mensurou a comparabilidade pelo modelo proposto por De Franco, Kothari e Verdi (2011) e adotou a abordagem estatística com análise de dados em painel. Os resultados mostraram que a comparabilidade média das empresas em relação ao setor e a comparabilidade intertemporal ao longo do tempo são positivas e associadas significativamente, assim como explicam o retorno das ações. Além disso, tanto a comparabilidade média quanto a comparabilidade intertemporal exercem influência positiva na informatividade dos preços das ações, permitindo inferir que a hipótese deste estudo não foi rejeitada.

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“…Increased analyst presence within an industry can indirectly improve the flow of information for a firm, even if the firm does not receive added coverage. More analyst coverage within an industry may have a spillover effect that results in intra-industry information transfers (e.g.,Hilary and Shen (2013)). For example, consider a tech analyst covering Samsung.…”

mentioning

confidence: 99%